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China ETFs to Shine Bright on Solid Economic Data

The bout of positive economic data is strongly suggesting that the world’s second-largest economy is steadily recovering from the coronavirus-led economic slowdown. The country’s August industrial output rose the maximum in eight months, while retail sales increased for the first time in 2020. The strong economic data sets have spread optimism among investors, with Asia equities gaining post the data release.

The country’s strong control on the coronavirus outbreak is expected to have supported the faster economic recovery. Moreover, massive government stimulus and support from the central bank have been strong contributors to China’s impressive economic recovery. In this regard, Ting Lu, chief China economist at Nomura, has said that “strong external demand, a further recovery from the pandemic and pent-up demand from the floods all contributed to the robust activity data in August,” according to a Reuters article.

Economic Data in Detail

According to data from the National Statistics Bureau, there was a 5.6% year-over-year rise in industrial output in August, per a Reuters article. The metric compares favorably with July’s 4.8% growth. It also surpassed economists’ forecast of 5.1% growth, per a Reuter’s poll. Moreover, ending a seven-month period of decline, retail sales were up 0.5% year over year in August as against July’s 1.1% decline. However, consumer confidence was observed to be gradually improving from expenditures on automobiles and duty-free shopping, per a Reuters article.

Moreover, there was an 11.8% year-over-year spike in auto sales in August, while sales of telecoms products rose 25.1% year over year, as reported in a Reuters article. Notably, fixed-asset investments also started to pick up slowly as they decline 0.3% year-over-year in January-August period as against 1.6% decline in the first seven months of 2020.

Going on, private sector fixed-asset investments, which make up 60% of total investments, declined 2.8% in January-August, in comparison with a 5.7% decline in the first seven months of the year, according to a Reuters article. Moreover, property investment rose the most in 16 months in August.

Commenting on the data, Louis Kuijs at Oxford Economics said that “we think that China’s economic recovery is on a reasonably firm footing now and should continue through Q4 and into 2021, with solid investment growth, gradually recovering consumption momentum and resilient exports,” per a Reuters article.

China ETFs to Gain

Against this backdrop, investors can keep a tab on a few China ETFs like iShares MSCI China ETF MCHIiShares China Large-Cap ETF FXIXtrackers Harvest CSI 300 China A-Shares ETF ASHRSPDR S&P China ETF GXC, iShares MSCI China A ETF CNYA and Invesco Golden Dragon China ETF PGJ.

MCHI

This fund tracks the MSCI China Index. It comprises 608 holdings. The fund’s AUM is $6.02 billion and expense ratio is 0.59% (read: ETF Winners as US-China Stay Committed to Phase 1 Trade Deal).

FXI

This fund seeks long-term growth by tracking the investment returns, before fees and expenses, of the FTSE China 50 Index. It comprises 50 holdings. The fund’s AUM is $3.35 billion and expense ratio is 0.74% (read: China ETFs to Gain on Positive Trade Data Amid Coronavirus Crisis).

ASHR

This fund tracks the CSI 300 Index. It comprises 308 holdings. The fund’s AUM is $1.82 billion and expense ratio is 0.65%.

GXC

The fund seeks to provide investment results that, before fees and expenses, correspond generally to the total return performance of the S&P China BMI Index. It comprises 733 holdings. The fund’s AUM is $1.41 billion and expense ratio is 0.59% (read: Alibaba's Strong Fiscal Q1 Earnings Put These ETFs in Focus).

CNYA

The fund tracks the MSCI China A Inclusion Index. It comprises 475 holdings. The fund’s AUM is $510.6 million and expense ratio is 0.60%.

PGJ

This fund follows the NASDAQ Golden Dragon China Index, which offers exposure to the U.S. exchange-listed companies headquartered or incorporated in the People’s Republic of China. It holds a basket of 64 stocks. The product has AUM of $189.1 million and charges 70 bps in annual fees.

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iShares MSCI China ETF (MCHI): ETF Research Reports
 
iShares China LargeCap ETF (FXI): ETF Research Reports
 
SPDR SP China ETF (GXC): ETF Research Reports
 
Xtrackers Harvest CSI 300 China AShares ETF (ASHR): ETF Research Reports
 
Invesco Golden Dragon China ETF (PGJ): ETF Research Reports
 
iShares MSCI China A ETF (CNYA): ETF Research Reports
 
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